Macroeconomic Forecast Taiwan

The Central Bank of the Republic of China (CBC) continued to add to its hoard of foreign currency through April, with reserves rising US$2.5bn to US$357.6bn. While this action represents a sizeable drop in CBC intervention as compared the same month of 2009, when the Taiwanese central bank added US$4.6bn to its reserve holdings, it nevertheless continues to depress the value of the Taiwanese dollar. In the months ahead we expect this intervention to moderate further as the CBC increasingly moves towards inflation fighting, thereby allowing the island's currency to appreciate towards our TWD31.00/US$ target.

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